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Mortgage Protection Query

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  • 12-10-2014 12:47am
    #1
    HankSchrader
    Registered Users Posts: 76 ✭✭


    When getting mortgage protection insurance is there anything specific to look for? If I was to avail of just the protection policy (no illness cover) to run the length of the mortgage term surely I'd go for the cheapest as all have the same set up (ie pay out if you die)?

    The bank's rate is coming in at over €4 more per month vs low.ie


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    #2
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    Correct, mortgage protection is a specialised form of life assurance and there's no difference between any two policies if the benefits are the same. You can shop around on the web and get the best quote, most of the life companies will give you an online quote.


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    #3
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    HankSchrader wrote: »
    When getting mortgage protection insurance is there anything specific to look for? If I was to avail of just the protection policy (no illness cover) to run the length of the mortgage term surely I'd go for the cheapest as all have the same set up (ie pay out if you die)?

    The bank's rate is coming in at over €4 more per month vs low.ie

    You should go through a broker who will have agencies with all the Life Offices, broker will give you the cheapest quote however there is a difference in the cover for instance at the moment Aviva are offering 5% discount on all price match premiums and they also offer 'Free Best Doctors' which covers your family plus you and your partners parents. http://www.aviva.ie/broker/media-library/2.253.03.14BestDoctorsFlyer.pdf

    Hope the above helps.


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    #4
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    coylemj wrote: »
    Correct, mortgage protection is a specialised form of life assurance and there's no difference between any two policies if the benefits are the same. You can shop around on the web and get the best quote, most of the life companies will give you an online quote.

    Just to clarify ....

    You do not have to buy critical illness cover as part of mortgage protection and I personally would not allow anyone to bundle the two products together. Shop around online for a mortgage protection policy (MPP) only and take the best deal you can get.

    If you feel you should, you can take out critical illness cover later. The two products are completely different - one pays out only on death, the other only if you fall ill.

    Go near a broker and you are guaranteed to get the hard sell for critical illness cover, there is virtually no incentive for him/her to sell you MPP alone because with online MPP quotes so competitive, there is virtually nothing in it for the broker. Critical illness insurance however is highly profitable which means juicy commission which means you will have a hard job getting out of the place without signing up for both.


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    #5
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    coylemj wrote: »
    Just to clarify ....

    You do not have to buy critical illness cover as part of mortgage protection and I personally would not allow anyone to bundle the two products together. Shop around online for a mortgage protection policy (MPP) only and take the best deal you can get.

    If you feel you should, you can take out critical illness cover later. The two products are completely different - one pays out only on death, the other only if you fall ill.

    Go near a broker and you are guaranteed to get the hard sell for critical illness cover, there is virtually no incentive for him/her to sell you MPP alone because with online MPP quotes so competitive, there is virtually nothing in it for the broker. Critical illness insurance however is highly profitable which means juicy commission which means you will have a hard job getting out of the place without signing up for both.

    You do not have to take out critical illness cover to avail of FREE Best DOCTORS it comes free with a Mortgage Protection Policy. I do not agree that every broker will guaranteed try to sell you a critical illness policy, and yes there is of course something in it for the broker in selling you a Mortgage Protection policy he/she gets commission the same as the broker that will sell it to you online. I presume the Aviva Mortgage Protection Policy can be bought online.


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    #6
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    Trish56 wrote: »
    ... of course something in it for the broker in selling you a Mortgage Protection policy he/she gets commission the same as the broker that will sell it to you online.

    Buying MPP online cuts out the broker altogether and spares you the hassle of someone trying to bundle other products into the deal as appears to be happening with the OP's dealing with the bank's insurance sales rep.

    I'm not saying there is a problem using a broker, they do a good job selecting the right health insurance policy and if you have special requirements for a motor policy, they are the way to go. However MPP is as simple as it gets, you fill out a form that asks the usual questions and you get a quote, that's all there is to it. That's why virtually all of the life companies are more than happy to quote you for MPP online.

    If there is an added benefit in the Aviva MPP over and above the basics then well and good but the OP needs to check out their quote and compare it to others offering the same cover.


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    #7
    HankSchrader
    Registered Users Posts: 76 ✭✭HankSchrader


    Great guys thanks for all the replies. Friends First work out the cheapest so I'll probably go with them.


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    #8
    micar
    Registered Users Posts: 1,894 ✭✭✭micar


    I work for a Life Assurance company. I don't work in sales.

    You can have three different types of mortgage protection cover

    1) Term Assurance - the level of benefit and premium remains the same throughout the term of the policy provided you don't make any changes. The term is specified at inception.

    2) Decreasing Term Assurance - the premium remains the same but the level of cover decreases on an annual basis in line with outstanding mortgage amount provided you don't make any changes. The term is specified at inception.

    3) Unit linked protection policy. The premium and benefit are guaranteed for the first 10 years. On the 10th anniversary, the policy is reviewed. This may lead to an increase in premium. If an increase is required and it is not taken up then the would be reduced. The policy is subsequently each 5th anniversary and then annually from age 70. These are whole of life policies with no specified end date.

    Most people go with option 2). It's the cheapest.

    Most only have Life Cover. Some have Critical Illness but this is twice as expensive as Life Cover.

    The banks will only require Life Cover in place.

    Any of these policies can be used as cover for a mortgage. The bank will require that the policy is assigned to them.


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    #9
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    micar wrote: »
    I work for a Life Assurance company. I don't work in sales.

    You can have three different types of mortgage protection cover

    1) Term Assurance - the level of benefit and premium remains the same throughout the term of the policy provided you don't make any changes. The term is specified at inception.

    2) Decreasing Term Assurance - the premium remains the same but the level of cover decreases on an annual basis in line with outstanding mortgage amount provided you don't make any changes. The term is specified at inception.

    3) Unit linked protection policy. The premium and benefit are guaranteed for the first 10 years. On the 10th anniversary, the policy is reviewed. This may lead to an increase in premium. If an increase is required and it is not taken up then the would be reduced. The policy is subsequently each 5th anniversary and then annually from age 70. These are whole of life policies with no specified end date.

    Most people go with option 2). It's the cheapest.

    Most only have Life Cover. Some have Critical Illness but this is twice as expensive as Life Cover.

    The banks will only require Life Cover in place.

    Any of these policies can be used as cover for a mortgage. The bank will require that the policy is assigned to them.

    Appreciate the details but would have to point out that for most people, MPP means option 2, anything over and above is upselling.


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    #10
    micar
    Registered Users Posts: 1,894 ✭✭✭micar


    As I stated, it was the most popular and the cheapest.

    I'm just stating the options available.


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    #11
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    micar wrote: »
    As I stated, it was the most popular and the cheapest.

    I'm just stating the options available.

    Micar, a lender will not accept a unit linked policy as Mortgage Protection cover as the term has to be the same as the mortgage which is usually between 25 and 35 years.

    In the last year Life Companies have been selling enhanced Mortgage Protection Products such as allowing you alter the term, increase cover, waiver of premium free, free Life Care, free best doctors, free conversion option so it is not correct to say all Mortgage Protection products are the same.


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    #12
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    Trish56 wrote: »
    In the last year Life Companies have been selling enhanced Mortgage Protection Products such as allowing you alter the term, increase cover, waiver of premium free, free Life Care, free best doctors, free conversion option so it is not correct to say all Mortgage Protection products are the same.

    Go on then, tell us which of those companies offering 'free' this and that are cheaper than others who are simply offering the basic package.

    And if they're not cheaper with their package of goodies then they're not so 'free' after all, are they?


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    #13
    micar
    Registered Users Posts: 1,894 ✭✭✭micar


    coylemj wrote: »
    Appreciate the details but would have to point out that for most people, MPP means option 2, anything over and above is upselling.
    Trish56 wrote: »
    Micar, a lender will not accept a unit linked policy as Mortgage Protection cover as the term has to be the same as the mortgage which is usually between 25 and 35 years.

    In the last year Life Companies have been selling enhanced Mortgage Protection Products such as allowing you alter the term, increase cover, waiver of premium free, free Life Care, free best doctors, free conversion option so it is not correct to say all Mortgage Protection products are the same.

    We have unit linked contracts which are assigned to banks for mortgages. These are whole of life polices and thus have no end date. The issue they may have is that the cover is reduced when a review is not taken up. We automatically reduce the cover. We do inform the assignee and I suppose it's up to them to contact to client to advise that they are required to have a certain level of cover in place.

    There has been a lot of issues with unit linked contracts in recent years. Joe Duffy does regularly have callers about them.

    I never said that all mortgage protection policies at same.

    We have always permitted changes to decreasing term assurance policies - increasing/reducing the term, increasing/reducing the cover and removing certain benefits.

    The bank only care once the mortgage amount is covered and outstanding term is equal or greater then the outstanding term of the mortgage.

    You can increase the term and cover without the need for permission from the bank.

    Any alteration would be subject to a change in premium.


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    #14
    Trish56
    Registered Users Posts: 1,256 ✭✭✭Trish56


    coylemj wrote: »
    Go on then, tell us which of those companies offering 'free' this and that are cheaper than others who are simply offering the basic package.

    And if they're not cheaper with their package of goodies then they're not so 'free' after all, are they?

    I would suggest that if you have the time perhaps you contact a broker and get yourself a quotation for a MPP and perhaps then discuss with the broker what is included and who is the cheapest.
    The OP's question is now answered so I'm finished posting on this subject, my only advice to you is perhaps you need to brush up on your knowledge and products available in the market.


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    #15
    earlyapex
    Registered Users Posts: 195 ✭✭earlyapex


    OP, I recently took out a new policy with Friends First but did it through a broker called Low.ie

    I got a nice discount, it saved me 77 euro per year on my previous policy, works out 1800 euro save over the mortgage term left.

    Use Promotional code FIRU009522


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    #16
    coylemj
    Registered Users Posts: 25,437 ✭✭✭✭coylemj


    Trish56 wrote: »
    The OP's question is now answered so I'm finished posting on this subject, my only advice to you is perhaps you need to brush up on your knowledge and products available in the market.

    People in glasshouses....
    Trish56 wrote: »
    Micar, a lender will not accept a unit linked policy as Mortgage Protection cover as the term has to be the same as the mortgage which is usually between 25 and 35 years.
    micar wrote: »
    We have unit linked contracts which are assigned to banks for mortgages.


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    #17
    NinjaTruncs
    Registered Users Posts: 2,492 ✭✭✭NinjaTruncs


    Trish56 wrote: »
    In the last year Life Companies have been selling enhanced Mortgage Protection Products such as allowing you alter the term, increase cover, waiver of premium free, free Life Care, free best doctors, free conversion option so it is not correct to say all Mortgage Protection products are the same.

    These items are not free, they are incorporated into the cost of the policy, sure it's possible that they have been added to the policy without increasing the premium, but that would only be done to make the products more attractive, the net effect is that the Bank/underwriters margin would be reduced. But to say they are free is wrong, unless I can go in an get them without the need to buy a policy.

    4.3kWp South facing PV System. South Dublin



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    #18
    SBarrett
    Registered Users Posts: 160 ✭✭SBarrett


    coylemj wrote: »
    Just to clarify ....

    You do not have to buy critical illness cover as part of mortgage protection and I personally would not allow anyone to bundle the two products together. Shop around online for a mortgage protection policy (MPP) only and take the best deal you can get.

    If you feel you should, you can take out critical illness cover later. The two products are completely different - one pays out only on death, the other only if you fall ill.

    Go near a broker and you are guaranteed to get the hard sell for critical illness cover, there is virtually no incentive for him/her to sell you MPP alone because with online MPP quotes so competitive, there is virtually nothing in it for the broker. Critical illness insurance however is highly profitable which means juicy commission which means you will have a hard job getting out of the place without signing up for both.

    What absolute rubbish.

    If someone came to me and asked for mortgage protection cover, that is what they would get and the cheapest one on the market at that. If they wanted critical illness, we would explore their options there too.

    You may have a low opinion of financial advisors but there are a lot of us who are highly qualified, are ethical and who work in the best interests of our clients all the time.

    Steven


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